Vodafone Idea's $10-billion saving plan could cost 2,500 jobs

Both Idea Cellular and Vodafone Idea, in the run-up to the merger, have already let go of about 5,000 employees.

Vodafone Idea, India’s largest telecom company, is moving towards realising its targeted $10 billion synergy benefits from the merger, with a major part being rationalisation of tower tenancies, and is also likely to limit employee headcount to 15,000 levels. Vodafone India and Idea finally completed their merger last week — about two months behind schedule — and will need to shed up to 2,500 people from its 17,500-18,000 staff.

While some are likely to be absorbed in their respective parent companies — Vodafone Group and Aditya Birla Group — some others will be taken care of by natural attrition.

The week-old company is also likely to hold back promotions and increments for a while, people familiar with the matter said. Vodafone Idea however denied the employee-related moves, calling them “speculation”.

“There will be some rationalisation, which is natural and the company will look at reducing about 2,000-2,500 employees in the next few months,” said a senior executive aware of the developments.

The person added that the company will however look into the welfare of the employees, severance packages will be given and possibility of internal transfers within the parent group Aditya Birla Group will be explored.

Another senior executive in the merged entity said that internally, employees have been told that hikes and promotions this year will be halted for a while as the aim now is to keep ahead of competition and maintain the leadership position.

However, it was reiterated by the senior managers that the new firm will treat employees from both merging partners — Vodafone India and Idea — equally. During the town hall held last week, Suvamoy Roy Choudhury, HR head for Vodafone Idea, said: “All employees will be treated with respect.”

Also, like other operators in the industry, the new operator is seeing voluntary attrition, which should automatically reduce headcount. The telecom industry in the last two years has seen operators shut shop, merge and exit and there has been a steady exodus of employees.

Both Idea Cellular and Vodafone Idea, in the run-up to the merger, have already let go of about 5,000 employees and even prompted Vodafone Group to roll out golden handshakes for their good performers who could not be accommodated in the new firm.

“We believe one of the most critical points for post-merger Idea-Vodafone would be integration, given the different cultures of both companies — one is a domestic company while the other an international one,” said Bank of AmericaMerrill Lynch in a recent report.

“On day 1 of the merger, the 2 tenancies of each of these sites will be accounted as 1 tenancy and 1 loading, which should result in Rs 2,000 crore savings on an annualised basis according to estimates,” the report said. The new company has 73,000 overlapping sites. The brokerage house added that the next steps of integration would involve removing the overlapping 3G/4G equipment, which would lead to power savings.

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